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Unlocking growth through legislative reforms

Suchita Dutta Jan 15 2018, 0:56 IST

India is one of the most attractive destinations for investments in today's world. The GDP growth projected at above 6.5% is also one of the strongest attracting factors in the business environment. With this definitive indication of the competitive strength India has, we are struggling with the other end of extremities that impacts the most in ease of doing business – having an unorganised workforce/labour environment, thus slow labour reforms!

The recognition of challenges was a herculean task, wherein policy makers realised the need to simplify the 40 labour laws into four codes – wages, industrial relations, social security and welfare, and safety and working conditions - and are working towards it in the last three years. Moving it to the next level and bringing them to action is becoming the next area of concern for the business and labour market. While the deliberations are of utmost necessity with all stakeholders, it will also be the most daunting task for the government. In light of the same, the implications of the time spent is also a cause of pain the businesses, where smaller reforms are not as supportive sometimes.

Highlighting one such area, let us elaborate and understand, how a country stands to benefit through - mobilising job enablers and enhancing formal employment sector. Below are few indicative needs that will change the dynamics of employment.

National License for operations
The recent move of seeking suggestions for changes in CLRA Act, and approval of new wage code bill are initiatives taken by the government to promote reforms in India, and is a welcome change. However, the government needs to understand that the path to reforms is a difficult bridge to cross while keeping the demand of industry and workers in mind. Contract labour accounts for 55% of public sector jobs and 45% of those in the private sector. With the removal of the word 'abolition' and bringing operational license (national/state) for staffing players, it will encourage more jobs in the formal sector and provide social benefits to contract workers, which are the two main concerns of the government today.

Need for industry status

India is the third largest with 29 lakh flexi workers. The numbers are still not huge compared with the informal jobs that exist. In all practical applicability, this will be the only growing form of employment. The battle of employability to employment will be better addressed if people are skilled and are recognised positively for being on a contract job. That's where contract/flexi staffing industry plays a crucial role in the growth of the country.

An industry, as it is, it doesn't have the requisite acknowledgement today, and that is not supportive of the employment mobilisers by the government. The policy makers are still not taking into account from the ratification of ILO C181 to bring a formal industry designation for ontract staffing companies. This ultimately doesn't allow for any reforms to be addressed for this industry, as policies don't allow separation at this point. This is hurting the facilitation of employment mobilisation effectively.

More income tax payers
The approach towards reforms that is underlining most of the benefits today that are being announced for people in unorganised sectors are overlooking a simple fact - its short-term solution without any real benefits. Shortcuts to bring social security for all in the unorganised sector, without organising the unorganised players, is not going to go very far in action. If real action is taken, policy makers should consider that more tax payers can be added if corporates are given some relaxation to work with tripartite contract staffing companies, who can provide continual employment to flexi staff. Thus, bringing job seekers into a tax paying bracket gradually. Today, the government misses out on most such tax payers, because of short-term contracts due to fixed-term bipartite short-term employment.

Broader social security ambit

The employment facilitators that is the organised staffing companies are the only way to reduce unemployment and increase the ambit of people coming under social security. The government has to look at creating systems that support this form of employment creation. It not only allows corporates to address their needs to enhance productivity, but also to job seekers for becoming a contributing skilled workforce.

Contract staffing allows corporates to have ease of business by addressing productivity issues, just in time needs, and project-based workforce. This allows companies to be more compliant, and acts in the interest of the economy and job growth.

Continual employment

Regular employment in an economic scenario that is currently prevailing, may not be feasible to able to absorb most. Instead of the wait for a permanent job, enhancing the skill as per the market need is necessary. The right opportunity will encourage and absorb the person in the shift, given right skills. This is where organised flexi/contract staffing plays the role of the bringing continual job growth in the country for the youth of India.

Labour reforms must be linked to ease of doing business, workers benefits and generating jobs in the formal sector. Reforms need to be rationalised by defining each act as per different categories. While the intent is quite appreciated, the action is not matching the intent of the stakeholders, and needs immediate attention to be able to sustain investments in our country. The investments will not wait for reforms. Instead, the reforms have to be fast and attractive for the investments to stay in the country.

(The writer is Executive Director, Indian Staffing Federation)

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